Red tape ‘fail’: Good intentions losing out along Highway 12

Anthony Trujillo Contributor
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This week, governors of 19 states and 3 US-flag Pacific Islands are converging on Las Vegas for the Western Governors Association meeting. And as chairman of the statewide chamber of commerce in a sister regional state of New Mexico, I hope WGA participants will consider and act on some important hindrances to business and economic development.

Topics of discussion at the meeting will range from enhancing communication to developing natural resources. The common theme among all of these issues is policy and process refinement. The reason our elected leaders are spending two days learning to hone these systems? Western states suffer no shortage of examples of the kind of unintended economic fallout that ensues when special interest groups play politics in what should otherwise be straightforward, legal processes.

In the current economic climate, that’s a costly problem our leaders cannot afford to ignore. Just consider the following sampling.

Nevada has its share of insalubrious activities “for sale,” but interior decorating advice is apparently not one of them. A nearly 10,000-word long state statute governing interior decorating and architects requires that those who dole out decorating advice be licensed. This costly and lengthy licensing process artificially limits the supply of interior decorators and, thus, keeps their fees high and the competition out.

In New Mexico, prohibitively costly regulations on water quality permits proposed by the state Environment Department threaten to force as much as half of local dairies to either move or close their doors altogether. Currently, milk ranks as New Mexico’s top cash commodity with 4,000-plus workers and 355,000 dairy cows in the state’s dairy industry adding $1.36 billion to its economy. Yet, overreaching regulators could milk this vital sector at little or no benefit to the environment.

In Texas, a centuries-old hair-removal technique called threading has become an eyebrow-raising regulatory issue. Since April, Lone Star lawmakers have been actively enforcing a law that requires eyebrow threaders to have a cosmetology license as well as a business license. But to obtain one of the licenses the state offers, threaders must take 1,500 hours of instruction — none of which actually addresses threading — and pay up to $22,000. Such excessive, unnecessary costs have left these Texas entrepreneurs in a hairy situation.

In Redmond, WA, bagel maker Dennis Ballen was unable to afford traditional advertising, so he paid individuals to hold a sign outside and direct what amounted to about $200 of new business daily to his store. Citing a Redmond city ordinance that prohibited mobile signs, officials threatened Ballen with $5,000 in fines if he did not obey a cease-and-desist order.

Fortunately, Ballen’s story had a happy ending. After winning a legal challenge, he used additional revenue generated by the signs to expand his bagel empire with two new stores and employ dozens more people. His triumph in the face of red tap demonstrates, on a small scale, the economic opportunities that gratuitous politicking can squelch. And the stakes are often much, much higher.

For a current example, participants at this week’s WGA meeting should consider the way in which Washington, D.C.-based environmental lobbyists have turned a permitting process to enable trucks in Idaho and Montana to pass through Highway 12 in the wee hours of the night into a proxy fight over the Canadian oil sands.

Campaigns by these outside groups to derail the permitting process to serve their own political motives are putting local economic interests (to the tune of $80 million) in jeopardy.

In this sense, the contractors, port operators, and others in Idaho and Montana fighting to keep these shipments from being delayed or canceled altogether are fighting for their livelihoods. It’s the same fight taken up by Texas tweezers, Silver State stylists, and a West Coast entrepreneur.

As these examples illustrate, regulatory red tape can have unintended consequences for entrepreneurs, businesses and communities alike. Let’s hope the conference’s goodie bag includes a pair of scissors.

Mr. Trujillo serves as Chairman of the Association of Commerce and Industry of New Mexico.